Major Scam by South Korean fraudsters

Colin Baseman

The cryptocurrency market has been heavily criticized in recent years due to increased fraud and speculation. Digital signs are prohibited in many countries. In Europe, bitcoin transactions are exempt from VAT.

Major Scam by South Korean fraudsters

In South Korea, an organized group of hackers managed to uncover more than $ 18 million in personal accounts. Read also the article "SIM-swapping helped an American steal a million dollars in cryptocurrency".

Scammers stole huge amounts of money in cryptocurrency by organizing an illegal pyramid scheme. Criminals promised investors large dividends. In the preview of the company, a convincing scheme was presented, according to which the token will grow in price from $ 0.0034 to$4.3.

The attackers misled ordinary citizens by convincing them that they have a unique technology for "mining" bitcoins. Investors are offered additional profit if they are to attract new investors. A growing number of victimes became referrals, attracted by exorbitant amounts of future income.

Thanks to the affiliate program, the fake company increased its revenue several times.

South Korean scammers claimed that a fintech company from Thailand was developing the coin. To convince its partners that the scammers showed the advertising token with the participation of foreign actors and fictitious information on the transaction.

During the investigation, law enforcement agencies found out that the company does not have a legal address and is not officially registered. Such an organization has never existed, as in other things, and a fictional token, the profit from which should have gone to the investor of the pyramid. 

The criminal scheme operated from August 2017 until the fall of 2018. The name of the company is currently suppressed in the media for security reasons.

According to experts, bitcoin may cease to exist due to high financial risks. The development of cryptocurrency is under threat for several reasons, among which the main ones are:

  • malicious program;
  • hacker attack;
  •  instability and volatility (unpredictable rate hikes);
  •  legal risks, lack of legal regulation;
  • bankruptcy of exchanges (over the past 5 years, about half closed).

This is not the first case of organized crime on crypto exchanges in South Korea. Previously, there was a case of a hacker attack on the South Korean stock exchange "Upbeat", thanks to which the attackers stole 49 million US dollars directly from the accounts of traders.

Hackers pursued the aim to attack the assets of the company Dunamu. About 400,000 units of Ethereum with a total value of about $ 50 million were withdrawn from the accounts. Representatives of the company claim that they noticed suspicious transactions, but were able to block them in time, as a result of which a record amount was stolen by modern standards. The management of the Upbeat exchange has taken responsibility for compensating the losses of customers affected by the attack.

Last year, another major Korean exchange, Bithumb, was subjected to a large-scale attack. Fraudsters managed to withdraw $ 30 million with impunity.

There will be more cases of Bitcoin theft

Recently, crimes related to fraud in the cryptocurrency market are increasingly surfacing. Experts note that in the future, the number of such incidents will only grow.

In December 2018, in Brazil, law enforcement agencies detained nine members of a criminal organization who organized a scam to profit from investing cryptocurrency. The scammers promised their new partners an incredible return on their investments. During the operation of the criminal scheme, they managed to steal more than $ 359. The leaders are charged with money laundering, extortion, and fraud.

Also, North Korea made a big splash a year earlier. In this region, hackers withdrew about $ 570 million in cryptocurrency. Companies with the name Lazarus organized and implemented a criminal theft scheme on a large scale. According to the cybersecurity service Group-IB, North Korean scammers have been responsible for more than 14 attacks on the exchange since January 2017. A group of hackers Lazarus stole more than half a billion dollars for 2 years of existence. Information about the incident might not have surfaced in the media if it had not been made public by the authorities of neighboring South Korea.

The cybersecurity service Group-IB claims that the damage from hacker attacks on exchanges selling digital currency over the past two years is equal to the equivalent of $ 882 million. Bitcoin experts believe that the number of thefts will only increase in the coming years, since this market is not sufficiently protected and does not have legal regulation. Fraudsters have switched from traditional stock exchanges to cyberspace due to multiple loopholes for creating criminal schemes.

International security services identifies the most common methods of attackers, including:

  • phishing (sending viral apps by e-mail);
  • malware (software), viruses;
  • social engineering.

Group-IB has released startling figures on the scale of hacker activity: criminals managed to steal about 10% of all collected funds from ICO platforms. The main way to hack accounts is using phishing. Investors in the pursuit of quick profits often lose their vigilance and forget about security. Hackers' tricks are often disguised as a simple e